Those hoping to make it big on oil commodities would do well to bet against the bulls on parade, as China won’t be around to keep prices afloat this time.
During the early days of the Great Recession, oil prices quickly regained footing thanks to China’s then-booming economic standing, Bloomberg reports. However, fuel use in the nation has slowed by half of what it was in the previous decade, following global trends of decreased consumption.
Global demand is expected to grow 1.3 million barrels/day to 94.58 million in 2016 according to the Energy Information Administration, with China taking 11.34 million barrels/day; the U.S. will use 19.44 million/day, lower than what was used in 2008. The figure is an increase of 3.1 percent over this year, yet pales when compared to the 11-percent jump in 2010. The spike delivered a boost to oil prices of 15 percent.
Combined with rising oil production pushing toward a glut in supply — to the tune of 1.8 million barrels/day in inventory currently, and 900,000/day during H2 2015 — China’s economic power faltering despite the government’s best efforts, and technological advancements reducing overall oil consumption, the global demand for oil will remain low for some time to come.
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